There’s an old saying that the easiest way to make a million dollars in the bicycle industry is to start with two million dollars … the implication being that associating with cycling is a money-losing business; and it’s easy to see how that saying comes to pass when you look at how many bike shops fail every year, and the financial woes of some of the major bicycle manufacturers, like Schwinn, which went bankrupt twice in 10 years, and Cannondale, which had its own bankruptcy woes until being rescued by a private equity fund.

Unfortunately, it seems like the association of losing money and cycling extends further than just within the bicycle industry, but also to the murky world of hedge funds.

From the lastest issue of The Economist:

Peloton runs out of roadA hedge fund is unsaddled by subprime troubles. It may not be the last.

AFTER hubris comes nemesis. On January 24th more than 1,000 leading figures in the European hedge-fund industry gathered for a dinner at the swanky Grosvenor House hotel on London’s Park Lane to witness the EuroHedge awards for 2007. Out of the 20 awards, two—credit fund of the year and new fund of the year (for non-equity strategies)were awarded to Peloton Partners, a credit manager set up by ex-Goldman Sachs employees in 2005.

But Peloton (the word is related to platoon and refers to the pack of riders in a cycle race) had already hit a sizeable pothole. On Thursday, just five weeks after being honoured with the awards, the fund’s founders, Ron Beller and Geoffrey Grant, were forced to send letters (see link) to investors explaining that they were suspending redemptions from the fund.